home home  
 
 
 
 
 
 

Foreword: Enabling the evolution of advice in Canada



"IIROC recognizes the wealth management industry is evolving. We are committed to facilitating innovation and accommodating new advice and service offerings to better serve the needs and wants of Canadians, without compromising investor protection or choice.”

Andrew Kriegler
President and CEO
Investment Industry Regulatory Organization of Canada

Accenture continues to be at the forefront of the transformation taking place in the global wealth management industry. We help our clients deliver scalable and profitable advice experiences that resonate with investors in the digital age. We are delighted to have worked with IIROC on this groundbreaking piece of research and industry consultation and believe the outcome of this study will assist the Canadian wealth industry to innovate at a faster pace and reduce unnecessary cost burden while continuing to provide protection and access for investors of all ages.”

Kendra Thompson
Managing Director
Capital Markets, Wealth Management Lead, North America
Accenture

 

Foreword

The wealth management industry in Canada is undergoing a period of important transformation. Inter-generational wealth transfers, changing investor demographics, arrival of new players and the availability of new digital tools and financial technologies are fundamentally changing the attitudes of Canadian investors towards wealth and investing, how they consume advice and services, and how they prefer to interact with wealth management service providers. Given these changes, firms are exploring new business models to meet client expectations and redefining the scope of advice and services they provide.

As Canada’s wealth management industry evolves, IIROC also needs to continue to evolve. We (IIROC) are in the midst of a multi-part strategy to accommodate new business models and help facilitate access to appropriate and relevant wealth management advice and services, while continuing to fulfill our investor protection mandate.

In some areas, the kinds of changes we (IIROC)need to make to our regulatory framework are clear. In other areas, we have hypotheses as to the direction in which we should go. And in a few areas, the best way forward remains uncertain. It was very clear that we needed to talk directly to the industry to test our assumptions, and to deepen our understanding of the issues related to the industry’s evolution.

In collaboration with Accenture, we conducted an extensive consultation that included:

  • A series of interviews with IIROC-regulated dealers (“Dealers”) and other industry participants (e.g. non-IIROC members such as North American fintechs).

  • A quantitative Dealer survey.

  • A Dealer compliance roundtable (collectively, the “Consultation”).

In each interview, we explored four topics:

  • How investor needs and expectations are changing.

  • How firms are responding to those changes.

  • The challenges firms face when introducing new business models in Canada, including costs related to regulation.

  • Opportunities to foster a more engaged and bilateral relationship between IIROC and Dealers

In the Dealer survey and compliance roundtable, we explored the costs of regulatory compliance and the engagement between IIROC and its Dealers in greater depth. Concerning costs, we wanted to better understand the financial burden (direct and indirect) of regulation on firms and where the burden could be reduced to improve the investor experience and allow services to be more accessible to Canadians, including those that are historically under-served, without compromising investor protection.

IIROC and Accenture express our sincere thanks to the industry executives and other stakeholders who participated in the Consultation. We have worked to appropriately capture, understand and assess the many comments, ideas, reflections and anecdotes that arose. We would also like to extend a special thanks to all the administrative teams at the firms we met with for their help in organizing the interviews.

This report – “Enabling the Evolution of Advice in Canada” – includes the views of a significant portion of firms that IIROC regulates, and summarizes the key themes from our Consultation. It explores the drivers of transformation in the wealth management industry, and is designed to stimulate discussion among the industry, other regulators and policy makers, as well as investors, so that we can work together to effectively and appropriately respond to the evolving wealth management landscape. Continued collaboration with the Canadian Securities Administrators (CSA) and other regulators is critical to ensuring that regulation continues to evolve while ensuring that the regulatory framework remains flexible, efficient and protects investors.

We are also committed to engaging other stakeholders, particularly investors, in these discussions. We will continue to solicit direct feedback from retail investors through our cross-country panel to stay current with the changing needs and preferences of Canadians who seek to consume financial services.

We know that there is significant interest in next steps. This report does not constitute proposed IIROC rule amendments or guidance but rather is designed to help advance the discussion of how regulation can evolve to better support investors across Canada. Among our next steps will be engagement with retail investors, the industry and our regulatory partners. We will also clarify misunderstandings and misinterpretations we encountered during the Consultation, and work collaboratively to update our rules and guidance where appropriate, including flexibility in application without compromising investor protection.